A commodity investment publisher's First Amendment challenge of a federal law requiring anyone who advises or talks about products traded on an exchange to register as a commodity trading adviser can continue, a federal appeals court has ruled.

Commodity Trend Service, Inc. produces an array of newsletters and other publications containing general commodity advice aimed at the general public.

In the mid-1990s the Commodity Futures Trading Commission announced it would begin to more strictly enforce its registration requirements for commodity advisers. The government agency then investigated whether it should apply registration requirements to financial publishers — such as CTS — that do not offer specialized advice.

In July 1996, the agency began investigating CTS to see whether it should be required to register as an adviser. In the course of its probe, the commission subpoenaed thousands of CTS documents and took testimony from various CTS employees.

CTS filed a federal lawsuit, contending that its First Amendment rights have been violated by the investigation and by the registration law itself. For example, the company says it has had to suspend direct-mail advertising, stop new publications and change the scope of its commentary on commodities.

CTS contends that its general advice and commentary on commodity trading are protected expression under the First Amendment and that the registration requirement on its face violates its free-speech rights.

However, a federal district court judge dismissed the case last summer, without deciding the First Amendment arguments. The judge determined the claim was unripe because the government had not prosecuted CTS for failing to register.

The 7th U.S. Circuit Court of Appeals reversed that decision last week in Commodity Trend Service, Inc. v. Commodity Futures Trading Commission. The appeals court determined that CTS has adequately shown that it faced a “credible threat of prosecution.”

The district court had also ruled that CTS could not challenge the registration law on its face because CTS' speech was “commercial speech.” Under current First Amendment jurisprudence, commercial speech is entitled to less protection than noncommercial speech, such as political, artistic or scientific speech.

However, the appeals court determined that CTS' speech was not commercial speech. The appeals court wrote: “A long line of Supreme Court cases, however, confirms that speech does not become 'commercial' simply because it concerns economic subjects or is sold for a profit.”

The district court had ruled that CTS publications constituted commercial speech because many were advertisements or contained advertisements.

The appeals court squarely rejected that argument, noting that “a speaker's publication does not lose its status as protected speech simply because the speaker advertises the publication. … If the result were otherwise, then even an editorial in The New York Times would constitute commercial speech because the newspaper seeks subscribers through advertisements.”

Bill Nissen, the attorney for CTS, applauded the appeals court's decision to send the case back to the district court to determine the First Amendment claims.

“This law is an unconstitutional prior restraint,” he said. “It requires a publisher to obtain a government license before publishing.”

Scott Bullock, an attorney with the Institute for Justice who has filed a separate challenge to the commission's registration requirement in a D.C. federal court, agreed that the decision was well-reasoned.

“Basically the thrust of the decision was that the appeals court told the government agency: 'quit throwing up phony procedural arguments and defend the constitutionality of your program,'” he said.

Bullock said that the commission's registration requirements threaten free speech because “licensing is one of the severest restrictions you can have on free speech.”

“You cannot license speech under the First Amendment. This law is a classic example of regulatory overkill,” he said.

A call placed to the attorney who argued the case for the commission was not returned.

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THE EXPERTS

The First Amendment Center is an educational organization and cannot provide legal advice.

Ken Paulson is president of the First Amendment Center and dean of the College of Mass Communication at Middle Tennessee State University. He is also the former editor-in-chief of USA Today.

Gene Policinski, chief operating officer of the Newseum Institute, also is senior vice president of the First Amendment Center, a center of the institute. He is a veteran journalist whose career has included work in newspapers, radio, television and online.

John Seigenthaler founded the Newseum Institute’s First Amendment Center in 1991 with the mission of creating national discussion, dialogue and debate about First Amendment rights and values.

About The First Amendment Center

We support the First Amendment and build understanding of its core freedoms through education, information and entertainment.

The center serves as a forum for the study and exploration of free-expression issues, including freedom of speech, of the press and of religion, and the rights to assemble and to petition the government.

Founded by John Seigenthaler, the First Amendment Center is an operating program of the Freedom Forum and is associated with the Newseum and the Diversity Institute. The center has offices in the John Seigenthaler Center at Vanderbilt University in Nashville, Tenn., and at the Newseum in Washington, D.C.

The center’s website, www.firstamendmentcenter.org, is one of the most authoritative sources of news, information and commentary in the nation on First Amendment issues. It features daily updates on news about First Amendment-related developments, as well as detailed reports about U.S. Supreme Court cases involving the First Amendment, and commentary, analysis and special reports on free expression, press freedom and religious-liberty issues. Support the work of the First Amendment Center.

1 For All

1 for All is a national nonpartisan program designed to build understanding and support for First Amendment freedoms. 1 for All provides teaching materials to the nation’s schools, supports educational events on America’s campuses and reminds the public that the First Amendment serves everyone, regardless of faith, race, gender or political leanings. It is truly one amendment for all. Visit 1 for All at http://1forall.us/

Help tomorrow’s citizens find their voice: Teach the First Amendment

The most basic liberties guaranteed to Americans – embodied in the 45 words of the First Amendment to the U.S. Constitution – assure Americans a government that is responsible to its citizens and responsive to their wishes.

These 45 words are as alive and important today as they were more than 200 years ago. These liberties are neither liberal nor conservative, Democratic nor Republican – they are the basis for our representative democratic form of government.

We know from studies beginning in 1997 by the nonpartisan First Amendment Center, and from studies commissioned by the Knight Foundation and others, that few adult Americans or high school students can name the individual five freedoms that make up the First Amendment.

The lesson plans – drawn from materials prepared by the Newseum and the First Amendment Center – will draw young people into an exploration of how their freedoms began and how they operate in today’s world. Students will discuss just how far individual rights extend, examining rights in the school environment and public places. The lessons may be used in history and government, civics, language arts and journalism, art and debate classes. They may be used in sections or in their entirety. Many of these lesson plans indicate an overall goal, offer suggestions on how to teach the lesson and list additional resources and enrichment activities.

First Amendment Moot Court Competition

This site no longer is being updated … And the competition itself is moving to Washington, D.C., where the Newseum Institute’s First Amendment Center is co-sponsoring the “Seigenthaler-Sutherland Cup National First Amendment Moot Court Competition,” March 18-19, in partnership with the Columbus School of Law, of the Catholic University of America.

During the two-day competition in February, each team will participate in a minimum of four rounds, arguing a hypothetical based on a current First Amendment controversy before panels of accomplished jurists, legal scholars and attorneys.

FIRST AMENDMENT CENTER ARCHIVES

State of the First Amendment survey reports

The State of the First Amendment surveys, commissioned since 1997 by the First Amendment Center and Newseum, are a regular check on how Americans view their first freedoms of speech, press, assembly, religion and petition.

The periodic surveys examine public attitudes toward freedom of speech, press, religion and the rights of assembly and petition; and sample public opinion on contemporary issues involving those freedoms.
See the reports.